1.

Introduction of Amazon

The retail industry has an extremely broad scope. Therefore, it is necessary to reduce the scope
of the analysis to specific segments of retail. This presentation will focus on two segments of the
retail industry, mass merchandising and internet retailing. According to annual revenues, the
leading general merchandise retailer is Wal-Mart and the leading internet retailer is
Amazon.com.

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Timeline photo

Amazon was founded in 1994 by Jeff Bezos and was originally started as an online
bookselling company, Amazon then has grown into an internet-based business enterprise that is
largely focused on providing e-commerce, cloud computing, digital streaming and artificial
intelligence (AI) services.

2. Key takeaways in their business strategy differences:

- Wal-Mart (Walmart has more than 10,500 stores in 20 countries and ecommerce
websites), and Amazon (can ship to 130 countries) service customers through different
distribution channels. Wal-Mart primarily services customers through physical retail
locations and Amazon.com services customers through an online storefront with
distribution provided by Amazon.com and partner distribution centers, as well as third-
party companies.
- Walmart offers in-store pickup and returns, while Amazon relies on delivery and return
shipping.
- Walmart focuses on low prices and a wide product selection, whereas Amazon
emphasizes convenience and fast delivery.

3. Comparison on supply chain: The supply chain is a critical component of any successful
business, and these 2 companies have developed highly efficient supply chains that have
helped them become the giants they are today. While both companies share similar goals
and target customers, their supply chains differ in many ways. The next part I would
focus on the similarities and differences between the Amazon and Walmart supply chains.
A, Sourcing and procurement:
Overall, Amazon has a global approach, while Walmart focuses on local sourcing.
Amazon has a large network of suppliers from around the world, allowing them to source
products from the most cost-effective locations. This allows Amazon to offer competitive prices
and a wide selection of products. Amazon also has a strong focus on technology, which allows
them to automate the procurement process and reduce costs.
Walmart, on the other hand, focuses on sourcing from local suppliers, which allows them to build
relationships with local businesses and support the local economy. Walmart also has a strong
focus on sustainability, in which the company works with suppliers to ensure that their products
are produced in an environmentally friendly manner.
B, SCM strategies and technology
Overall, both companies have invested heavily in technology and automation to streamline their
operations, and both have implemented a number of initiatives to optimize their supply chains.
Some strategies they are using are, for example, the use of advanced analytics to identify and
address inefficiencies, the use of predictive analytics to anticipate customer demand, and the use
of AI to automate processes.
Additionally, they have invested in a network of warehouses and fulfillment centers around the
world to ensure that products are delivered quickly and efficiently.
In addition to these strategies, both Amazon and Walmart have invested in a number of other
initiatives such as the use of third-party logistics providers to manage inventory and
transportation,

the use of advanced tracking systems to monitor shipments, and the use of digital platforms to
facilitate communication between suppliers and customers.

As for Amazon: The company’s Fulfillment by Amazon (FBA) program allows third-party
sellers to store their products in Amazon’s warehouses and have them shipped directly to
customers. This eliminates the need for sellers to manage their own inventory and shipping,
allowing them to focus on other aspects of their business.

As for Walmart: The company’s Retail Link system allows suppliers to access real-time data on
sales, inventory levels, and other metrics. This helps Walmart and its suppliers better manage
their inventory and ensure that products are available when customers need them.

C, Inventory Management:
Amazon has developed a sophisticated inventory management system that is based on the
principles of demand forecasting and supply chain optimization. The company uses predictive
analytics to anticipate customer demand and adjust its inventory accordingly.
Walmart, on the other hand, has adopted a more traditional approach to inventory management.
The company relies heavily on its network of stores to manage inventory levels. Walmart uses a
combination of manual and automated processes to monitor inventory levels.
D, Logistics Management:
One of the hallmarks of the Amazon experience is quick shipping. Amazon sets the standards
shipping time for all other e-commerce retailers with its same-day and next-day shipping for
Prime members. 

Amazon has also built out its fleet of trucks and planes to be completely in control of logistics. 

They have more than 110 airplanes today with air hubs with room for up to 100 air planes and
300 trucks at one. They also have the FAA-approved delivery drone for 30m delivery option.
Walmart is following in Amazon’s footsteps with one-day shipping. In May 2020, Walmart
unveiled Express, its two-hour delivery service. Walmart is also expanding its Alphabot
system to automatically fulfill customers’ grocery orders and converting more stores into
automated fulfillment centers. 

4. Cost management:
Wal-Mart’s operating models and processes that enables it to achieve its strategic objective is
based on the bellow:
 Lowest retail price in the market: Wal-Mart focuses on providing lowest possible price
among competition, instead of providing promotions. Wal-Mart provides everyday low
prices for its customers.
 Economies of scale and supplier pressure: Wal-Mart uses its volume to reduce its costs of
purchase from vendors, as much as possible. Moreover, 90% of the U.S populating lives
within 15 miles of Wal-Mart store. These strategic geographic locations of Wal-Mart have
assisted Wal-Mart to achieve very high volume and sales and generate economies of
scale, as a result.
 IT Investments: Wal-Mart leverages IT capabilities to better understand and manage its
operations. This ranges from investing in satellite systems that links all operating units
with the company’s headquarters to radio frequency technology that would be able to
optimize inventory management by revealing the exact locations of all inventory in the
supply chain, which in return reduces its working capital investments and costs
associated with it
 Supplier relations: Wal-Mart works extensively close with its suppliers and outsources its
point of sales data to its suppliers. This data is used by Wal-Mart’s suppliers to manage
their inventory and supply chain to reduce waste in inventory management at Wal-Mart.
Essentially giving the decision of inventory management to the suppliers that can best
estimate the throughput and cycle time of there products, in order to prevent stock outs or
excess inventory.
 Great Customer Service: Strong emphasis by management to establish a hospitable
environment for its customers. This includes greeting customers as they walk into the
store, free parking, and flexible return policy
 Transportation cost: Transportation can cost up to 2/3 of the total cost of distributing
product. Walmart's approach—using private fleets to deliver to their stores—is a tactic
that helped the company achieve two different strategies. The first strategy was to limit
 the margin that would have to be paid to a third party providing that service. The second
strategy was controlling the fleet, which enables Walmart to control the quality and
timing of the movement of freight from the distribution centers to the stores. It reduces
labor costs and maximizes the utilization of assets and resources. Take it one step further;
using that same fleet to pick up the freight from suppliers back into the distribution
centers helps offset the cost of running the empty miles from the retail stores back to the
distribution centers.

Source:
https://www.forbes.com/sites/blakemorgan/2021/06/14/who-wins-the-battle-of-walmart-vs-
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supply-chains/
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